Connecticut through a number of efforts that include Small Business Express and a pair of programs targeting manufacturing is focused on creating and retaining jobs. While private-sector lending can be dictated by the bottom line, the state Department of Economic and Community Development and Catherine Smith, its commissioner, by design seek longer-term results from business financing, namely, “How are they going to recover, sustain themselves, grow and create jobs?”
The Fairfield County Business Journal put a series of questions relating to finance to Smith via email as the second part of a two-part finance series. Connect Innovations, which assists the state”™s technology sector with financing, was the subject of part 1.
- Catherine Smith, commissioner of the state Department of Economic and Community Development, in Greenwich last summer at the relocation of Fifth Street Management from New York state.
FCBJ: Small-business financing ”” whether for working capital, equity investment or purchases ”” took a hit in the recession. How has today”™s financing landscape been altered?
Smith: “At the time it was created, the Small Business Express program (known as EXP) addressed a real market need ”” the private sector had dramatically tightened lending in the wake of the Great Recession ”” and that was hindering many small-business people who were trying to recover from the recession and grow. EXP was designed to help our Main Street companies get back to business.
“While access to capital has become better, the effects of the recession are still felt by many businesses, especially the smaller ones, so demand for EXP continues to be strong.”
FCBJ: What is the best advice for small businesses seeking financing? Is there any action they can take either to ensure a loan”™s approval or to keep a loan”™s interest rate low?
Smith: “A strong balance sheet and consistently positive cash flow are always important to lenders. In this market, projects investing in capital equipment, where financing is secured with physical property, are often favorably reviewed. And it is generally a baseline requirement that the company have no unresolved issues with other lenders or governmental agencies.
“With respect to EXP, there are some important factors to keep in mind. Our staff goes out of its way to work with individual businesses to structure terms that will work ”” EXP”™s purpose is to help small businesses grow ”” and sometimes we will help structure the loan so that the company has the ability to build up its business and tier interest payments that align with this cash flow.
“EXP also offers forgivable loans to companies seeking to grow ”” transforming the loan to a grant if the company succeeds in creating and sustaining jobs.
“EXP, like all financial assistance programs that DECD manages, is focused on the creation and retention of jobs ”” this is also a key characteristic that differentiates what the agency does from private-sector lending. We are most interested in the business”™ plans for the future ”” how are they going to recover, sustain themselves, grow and create jobs.”
FCBJ: Please address these three sources of funding and what they might present to a business seeking a loan: EXP, Manufacturers Assistance Act and the Manufacturing Innovation Fund.
Smith: “EXP is specifically reserved for businesses with fewer than 100 employees at the time of application. EXP has three forms of assistance: grants of up to $100,000, with a company match of at least 1-to-1 required; job creation loans of up to $300,000 that are partially (up to 50 percent) forgivable, based on the number and type of jobs created; and working capital loans of up to $100,000.
“While EXP represents the largest number of assistance agreements, we often work with companies that have more than 100 employees and expansion projects costing millions of dollars. These companies are funded through the Manufacturing Assistance Act, or MAA. Again, the terms are flexible and forgiveness provisions based on new job creation.
“For very large projects, where a company plans to add 200 or more jobs and make a substantial capital investments, we utilize the First Five program ”” a mix of tax credits, forgivable loans and small grants tailor-made for each First Five recipient.
“The Manufacturing Innovation Fund (MIF) is our newest program. It focuses on manufacturing companies that are innovating, commercializing new technologies or advancing their workforce in advanced manufacturing technologies. The first initiative for this fund is a voucher program that subsidizes the cost of specialized technical assistance for manufacturers. The fund is expected to announce additional initiatives later in the year that are geared at talent development and training.”
FCBJ: What is the department”™s economic development strategy for the state as it relates to small-business finance?
Smith: “We believe that small business is often the engine of growth in our economy. That”™s why we created the EXP program and why we work with many partners across the state to ensure our business community has access to capital, technical assistance and a strong business environment.
“In addition to financing programs, DECD has long-standing relationships with partners like Small Business Development Center in partnership with the federal Small Business Administration. They provide technical assistance and training as well as federally funded financing available through SBA.
“Other partners ”” CONNSTEP and CCAT ”” offer consulting, technology assistance and other tools to small businesses ”” particularly manufacturers ”” to give them access to the same sophisticated process development techniques that their larger competitors have.”
FCBJ: Culture and tourism are big economic players underpinned by many small businesses. How does the state”™s ”˜Still Revolutionary”™ branding campaign fare?
Smith: “The campaign has been very successful ”” an award-winning program that has generated impressive shifts in perception about the state since we launched in the spring of 2012. We”™re building credibility and recognition ”” and our latest ads (both online and in traditional media) feature leaders from Connecticut Fortune 100 companies to Main Street businesses explaining why Connecticut is a great place to do business. With this campaign alone, we have seen our survey scores rise as much as 72 percent in viewers”™ perception of the state as a ”˜dynamic and innovative place”™ and ”˜a great place to relocate to.”™”
FCBJ: You are hosts of a new website that ties together resources irrespective of origins. What is the address and what does it do? Is it easy to use and is it working?
Smith: “Yes, we are in the process of creating a new business portal that will provide a much more user-friendly interface for businesses to access the services and support they require to start and grow their business in the state. At the new portal, the user will easily find all state resources
“While work remains to be done to fully build out the site, visitors to ctforbusiness.com will find an easy-to-use menu of resources around the state to help them invest and grow their business.”
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